SSE announces green energy drive

The battle lines to become Britain's greenest electricity provider were drawn today as Scottish and Southern Energy said it was raising its ambitious targets to install wind farms and hydro-electric schemes.

As the Government prepares the way for a £20bn spending spree on new nuclear power stations, SSE - best known in London as Southern Electric - said it planned 4000megawatts of renewable energy schemes in the UK and Ireland within five years.

That means that by 2013, SSE alone will have green energy plants capable of producing around 7% of Britain's electricity needs, equivalent to the output of Yorkshire's coal-fired Drax plant, the nation's largest power station.

SSE said it would commit £2.5bn in capital investment to renewable energy schemes over the next five years after a review of its portfolio led to an increase in its targeted installation from 3500mW to 4000mW.

The increase in its ambitions follows its contentious £1bn acquisition of wind farms developer Airtricity at the turn of the year, by far the largest deal in the UK wind sector.

Airtricity currently barely makes a profit, and credit analysts have raised fears over how SSE will service the debt-financed deal, given the company's spending plans, which top a total of £6.5bn over the next five years, including building a gas- fired power station near Southampton and investment in regional power networks and gas storage facilities.

SSE's renewed green commitment is not all altruistic. With European Union demands for 20% of electricity to be derived from renewable sources by 2020, those power generators that do not commit to large-scale green projects will face increasingly punitive penalties through schemes such as renewable obligations certificates and emissions trading.

However, the company warned that investment in wind farms may not be plain sailing as global demand is far outstripping the supply capabilities of turbine manufacturers, while planning permissions could be a major issue in the UK.

'The logic for renewable energy is compelling,' said SSE chief executive Ian Marchant. 'Our aim to grow our energy capacity so significantly by 2013 is realistic and achievable but is inevitably subject to the maintenance of a policy and planning framework that recognises the scale of the climate change and energy security challenges which we will face in the coming years.'